Experiencing End2End Digital Supply Chains with SAP and their Partners
INNOVATION Magazine
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The senior executives who manage the SAP Digital Supply Chain organisation in Middle and Eastern Europe (MEE) sit down with INNOVATION Magazine to provide us with insights into the enabling power of digital solutions, collaboration and technology. As they align these hot topics to SAP’s expertise, capability, and partnership-led approach to solving challenges, they lead us through the key trends and opportunities of 2023.
There is a feeling fizzing out of SAP right now: enthusiasm. SAP’s SVP and General Manager of Digital Supply Chain MEE Andreas J. Wagner , and Chief Operating Officer for Digital Supply Chain MEE Dr. Johannes Tulusan deliver their cautiously optimistic view of the year ahead.
SAP’s optimism is founded in business projects that were planned and being executed long before the current economic shake-up. Across SAP, teams are looking to improve the solutions they already offer clients, switching from on-premise to cloud-based options, for example, and demonstrating how to increase product traceability and improve environmental, social and governance (ESG) performance.
Dr. Johannes Tulusan remains cautiously up-beat and explains, “You have to see the glass half full. Global circumstances might not improve in the near-term, but they give decision-makers the chance to rethink how to operate their business. Resilience in supply chains is already very important, and sustainability will definitely become important too. We at SAP are in a good position to support our customers on those fronts.”
Andreas J. Wagner starts his assessment by saying that supply chain visibility and supply chain flexibility are key differentiators in business. “The supply chain function is not a back-office function any more,” he explains. “It can either be a source of strength or weakness. Think about the loss of sales because of stockouts and the loss of loyal customers.”
He continues, “It has really become a strategic topic for our customers. Championing the design to operate process in the market can be a key differentiator because you will have digital and integrated processes and can really showcase the end-to-end value of the solutions within your key processes.”
This is about not only innovating and breaking down silos within a company, Andreas states. “You also need to standardise your connections with the outside world,” he says. “It's a very important process. For example, in the area of design innovation you already need to check early in the process whether the necessary suppliers are available and whether they can support needed quality and quantity before you even produce master data in an enterprise resource planning system,” he says. “And you also need to think about how you can quickly qualify a second or a third source in case of supply chain shortages of existing suppliers. You can only become successful with the close collaboration between sourcing and design – so between an internal function and the network outside of the company.”
What software solutions, technologies and strategies do SAP executives deem to be critical for enabling supply chain resilience in 2023? The benefit of cloud-based solutions, Andreas and Johannes agree.
Johannes considers Scandinavia and North America to be well advanced in adopting cloud solutions, while Switzerland is picking up adoption quickly; in comparison, Germany and Austria are somewhat behind. He acknowledges that there are businesses and industries that are not yet ready to use a full cloud approach for a critical key process, understandable when there is a highly automated production line, for example. He says the adoption process starts when there’s a need to improve flexibility or find better ways to address issues such as global supply chain shortages and higher energy costs. As decision-makers assess the right time to make the switch, they are balancing multiple factors against each other. A cloud approach means embracing change in the way software architecture is hosted. Continuing capital investments in data centres versus new cloud innovation investments can be quite a big stumbling block, Johannes acknowledges. “Businesses do realise innovating is key to staying competitive,” he says.
Another challenge comes when deciding which cloud software vendor to work with. There are so many newer ones to choose from that finding the right solution for a business’s existing products, processes or production can be difficult without expert guidance.
Johannes says, “Something that seems to be the ‘best’ solution might not actually be easily integrated into, say, an existing application landscape.” This is where SAP’s proven capability, established reputation, experience and network offer confidence when compared with less well-known “challenger” suppliers.
This is another area where SAP capabilities can add value in terms of cloud services, security and innovation. Together with its strong partner ecosystem, SAP has been helping business leaders respond to a constantly changing world, and recover from supply chain disruptions.
Considering other challenges to face in 2023, Andreas points out the issues of security and the rise in the number of hacking attempts. “If you have your IT server in the ‘basement’ of your factory, it is at higher risk of hacking right now. There’s also a risk that in the long run you won’t have the right resources any more, or enough IT staff to maintain it overall. We are seeing labour shortages,” he warns.
The lack of data centre knowledge is partly the result of a shift to cloud solutions, and while fewer younger workers are entering the labour market, there are more older workers retiring. The imbalance between generations is affecting many industries and services. In January 2023, the German Chambers of Commerce and Industry (DIHK) reported that more than half the nation’s companies were finding it difficult to fill vacancies due to a lack of skilled workers. In DIHK’s survey of22,000 companies, 53% reported such shortages.
Next, Andreas and Johannes highlight the trends of nearshoring (bringing manufacturing operations or supply closer to a company’s headquarters or end customers), onshoring (basing operations in a company’s home country), and reshoring (returning operations to a home nation) as key components to maximising risk-resilient supply chains that are backed by technology.
After the challenges of the pandemic years, the vulnerability of the global supply chain has been further exposed by geopolitical unrest. For a very long time, the focus has been on building lean, low-cost operations that were predominantly offshore, but this left companies defenceless against the supply and demand issues that the pandemic created. It is not surprising, therefore, that the benefits of nearshoring, onshoring, and reshoring are hot topics for 2023. By moving supplier sources closer to key markets, supply chain – and business leaders are able to mitigate risk, manage cost, optimise time to market, improve visibility and communication, and increase flexibility in response to disruption. But before eradicating existing production facilities, supply routes, or manufacturing chains, it is essential to bring key data into the picture. It was once a relatively straightforward decision to locate a factory in Asia based on overall costs. Since the pandemic, however, so much is being reconsidered. There has been strong evidence of this in the United States, where reshoring and nearshoring are already happening as manufacturing companies move operations from Asia to Mexico, Central America, and Canada. Johannes sees European businesses that are also assessing how they can bring important operations closer to their home factories or key markets, but it is not as simple as it might seem. Making such a decision can be a complex and nuanced process.
Boosting responsiveness through technology and digital processes can smooth spikes in demand and iron out materials shortages, allowing planning across company networks, improving accuracy in predicting lead times, and enabling the ability to track goods. This can all be achieved more effectively if there’s transparency between suppliers, the manufacturer and the customer.
Digital integration also enables transparency for decision-makers who are considering their approach to sustainability. This is a topic that comes up again and again.
Andreas says customers and employees are making sustainability a requirement of their buy-in. He cites an anecdote from a client whose prospective new employee turned down a job offer on the basis that the company’s sustainability strategy was not clear enough.
On another front, customers and consumers are looking for traceability along the supply chain. Tracking all raw materials – from source and value creation through production and delivery – is of prime importance, Andreas explains, not just because of regulatory requirements.
A significant proportion of purchasers and customers will choose ethical traceability over a doubtfully cheap alternative.
“These regulatory requirements, they really affect the entire supply chain throughout the design to operate cycle, end-to-end, and at the end,” Andreas states. “It's all about generating and managing master data. You really need master data to be generated and managed across the entire value chain, so you are able to decide every step in the business process. How sustainable is this step? What are my choices? What is the financial impact? And then, as a decision-maker, you need to have the data available there to make the right decision here.” This is where SAP’s design to operate (D2O) approach is well positioned to enable companies to get a view on every aspect across critical business processes and make intelligent decisions backed by data. In addition, SAP CEO Christian Klein has already talked
about SAP adding a green ledger to enterprise resource planning (ERP) so that companies can account for their carbon emissions in the way they currently account for their financial situation.
“We can offer you reliable environmental, social and governance (ESG) data for your entire enterprise,” says Andreas. He cites the newest version of the AP? Sustainability Control Tower solution that lets you record and report audit-ready ESG measures and act on them, since the ability is already embedded into your business process. He continues, “Design, plan, manufacture, deliver to operate: It's all about waste reduction, emissions reduction, green packaging, energy reduction, lower carbon footprint, and fewer accidents. Every step of every process of design to operate has to have a strong link to sustainability. As I’ve already said, supply chains are right at the heart of sustainability topics.”
As businesses innovate, renew and move forward after the challenges of the last few years, SAP’s proven experience and expertise in business software development and delivery offer business leaders a range of opportunities to innovate in their core processes and meet markets’ demands. Up-front enthusiasm gets noticed and existing customers know the ability of SAP’s teams to meet new demands is all about excellence in understanding their customers’ requirements in their respective industry.
SAP’s Real-World Response to Supply Chain Challenges
When deciding how to respond to these key supply chain trends and challenges, SAP took action. Adding to SAP’s already comprehensive solution, service offering, and SAP Experience Centers around the world, October 2022 saw the launch of a new showcase area of SAP Industry 4.0 Center in Walldorf called The Factory, just a short walk from the SAP Experience Center. Together, these provide industry professionals with the opportunity to visit state-of-the-art spaces and witness SAP innovation, solutions and technologies in action. They illustrate how SAP works closely with customers and partners to find solutions to their challenges, and demonstrate SAP’s position as a market leader in digital supply chain (DSC) and integrated supply chain solutions and services.
Ralf Lehmann , senior director of SAP global solution management, and Matthias Deindl , head of SAP Industry 4.0 Center EMEA and India, present The Factory at SAP Industry 4.0 Center, in Walldorf. Taking a tour of the new facility offers glimpses of both the future and the cutting-edge present day of supply chain innovation. The Factory can be adapted to suit a wide range of scenarios, depending on a customer’s needs. It can focus on both batch production, as well as discrete manufacturing, addressing a multitude of different industries. It is unique in the sense that it is an end-to-end setup with real software systems and real shop-floor integration. All stages of the product lifecycle are demonstrated in a real-life setting, from product design, planning, and manufacturing, to logistics and maintenance. According to the customer's needs and interests, different parts of the end-to-end scenarios can be highlighted. While it is possible to tour The Factory virtually, it is the in-person, immersive experience that is proving very popular. Ralf, who is also creative director of SAP’s digital supply chain showcase, and Matthias, say that after years of pandemic restrictions, many customers and prospective clients actively want to come to Walldorf. They are keen to engage with the valuable supply-chain content in The Factory for themselves. Sustainability and the net-zero targets surrounding travel have to be factored into research costs, so SAP’s dedicated video-streaming equipment allows for a hybrid approach.
“People want to travel because there's a social element, and they want to see our software showcase and talk directly to our management in our headquarters building only 100 metres away from The Factory,” Ralf explains. In contrast, a global customer was able to stream the same experience to teams based across Europe, Asia, and South America simultaneously.
“Sometimes we have put on an overview and inspirational session for the top management, and then we will have three or four follow-up sessions for the whole team virtually,” explains Ralf.
SAP’s own teams value the interaction and are pleased to have in-person customers again, with direct feedback.
“We answer customer-specific questions and show the end-to-end value of supply chain – and SAP's ERP solutions integrated with our industrial hardware partners,” says Matthias.
The scenario is interconnected, and processes are visualised with lights.
“Imagine we are working here with liquid concentrate and have the standard production for the process industry with lots of tubes and tanks in there, all 100 percent realistic but our different ingredients are red, green and blue. We can mix different colours to demonstrate the customer scenarios,” says Ralf.
The key thing about The Factory at SAP Industry 4.0 Center is this: it comes across as an evolution (although it may be a revolution) that provides a visual and actual representation of all the digital supply chain has to offer clients, customers and partners. That is because the physical factory is a genuine representation of a real-life scenario. So, when a customer first arrives, whether that is physically or virtually, their impression is not of a “too pristine to be believable” film set, but of something that could be their own production line, manufacturing facility or processing plant.
As Matthias explains, “It's really interesting to see how, when they enter our factory, our customers have a smile on their face because everything is not super-shiny or what you might expect from a marketing pitch. It's hands-on, with work centres of the kind you would find in real life.”
Maybe it’s the lab coat hanging up in the corner. Or perhaps it’s the (deliberate) tank overfill that Matthias sets up to showcase the digital adaptability of the process, or the fact that a pick-and-pack scenario is running in the warehouse in the background. These combine to lend true authenticity to the experience and deliver real understanding.
“We show that we can speak with the automation layer, and that the automation layer can speak with SAP solutions. It’s about vertical integration, the information technology (IT) and operational technology (OT), and the total integration of those two worlds. It’s really demonstrable,” says Matthias.
C-suite executives, factory managers, IT experts or researchers can grasp the processes quickly, Matthias points out. And experts from different departments within the same company can come to the same place at the same time – virtually or in a hybrid format – without the need for multiple explanations as supply chain solutions are shown in action.
A chief operating officer (COO) or head of supply chain who is familiar with their own production facility can formulate questions about the industry-specific supply chain scenarios within The Factory at SAP Industry 4.0 Center. Convincing a chief financial officer (CFO) to buy into the head of manufacturing’s enthusiastic appreciation can be harder because they may have less knowledge of the ground floor. Yet sometimes the commissioning process starts at the other end of the business, in the C-suite, before it moves through to the manufacturing team, Ralf says.
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“What we try to do is not only address those who are doing the purchasing, but also those who are using the products later on,” says Matthias. That is where a virtual tour alongside the in-person, real-life tour, can be invaluable. For example, two principal decision-makers can stream a live feed to watch those who have to set up and operate a new process, or vice versa. It means questions or key issues can be pointed out and discussed through streaming technologies in different parts of the country, or the world, simultaneously.
“So, experts on the manufacturing side might want to know, ‘How did the automation of this robot work here? How did you integrate your smart tool? How does it work – show me!’ Then they can deep dive into the systems based on what they can see happening in the real enterprise IT landscape that we have in The Factory. And because everything is real, nothing is fake, it generates trust with our customers,” says Matthias. “People in top management don’t really need the details, but they can see the tangible use cases. It’s something they can grasp and discuss in a very short time.”
Ralf adds that inclusivity across levels promotes communication. For example, a factory worker might point out that glitches could be created if a tool or table is used in a proposed context. Such a small but essential comment might play a crucial role in improving manufacturing or maintenance processes. On the flip side, this immersive experience also provides an opportunity for customers to provide valuable feedback, creating a collaborative community environment.
This sense of collaboration is right at the heart of SAP’s approach. Ralf points out that where competitors might only run a scenario based on one operation or one out-of-the-box vendor, SAP is working in collaboration with many other business partners – small, medium, large, and global. Collaboration in this sense means building bridges, rather than operating in silos – a key mindset for SAP. The Factory is the perfect showcase for anyone needing to see discrete manufacturing, design to operate (D2O), and design to consume (D2C) capabilities, albeit on a small scale, and to visualise how something similar might fit into their own business. One of SAP’s great strengths is collaboration and cooperation, working with both partners and customers to help ensure the right solutions are available to suit particular needs.
“We would love our customers to run only SAP but – we have to be honest with ourselves – in reality, that is not the case. We are living in a heterogeneous world where the SAP software environment and different cloud companies play an active role. So, it's about connecting and being able to execute the business process end to end in the most efficient and secure way,” Ralf says. He has plenty of experience with companies operating on a silo-based approach, which makes it difficult to connect solutions or software, and so he welcomes the newer outlook of collaboration.
“Times are changing, and customers are pushing for harmonisation and open industry communications standards,” explains Ralf. In a world of mergers and acquisitions, he adds, with multiple vendors across factories, a heterogeneous approach allows for digital transformation, mass personalisation, and configuration, which in turn adds value and future-proofs a customer’s business.
“We have a lot of service and implementation partners, and SAP is powerful because of the partner ecosystem. They are all important partnerships, from the smallest automation centric, to the biggest as well,” he says. And if there is something that the last three years have shown, it is that no business is an island, and no supply chain is 100 percent secure.
Around 25 or so industrial partners support The Factory setting either by providing service input, supplying hardware, or jointly interacting over a digital supply chain order. Ralf and Matthias emphasise that partnership is SAP’s superpower.
“They all play a crucial, active role in bringing solutions to our end customers,” says Ralf. “SAP has such a broad portfolio when it comes to digital supply chain, and we think many of our customers across the world don’t realise that. Being able to support events here and put on inspirational sessions with hundreds of virtual attendees will showcase that.” Whether they are showing off the discrete assembly or the process industry scenario, Ralf and Matthias have a spring in their steps as their enthusiasm spills over.
“We are running cloud solutions, such as the digital manufacturing cloud in order to live this in a very tangible way,” says Ralf. “And the funniest thing is, whenever we start a customer session we say, ‘Everything you can touch here is not actually what we’re selling.’ What we do at SAP is the brain inside the orchestration, the software that is empowering these scenarios. But what you can touch is what is familiar and recognisable from home, from your own factories, and this is the really cool part of The Factory at SAP Industry 4.0 Center.”
Building SAP’s Strong DSC Partner Ecosystem
Ralf and Matthias’s passion for innovation, collaboration, and “building bridges, not silos” is shared by Sasa Glisic , Anna Jagodzińska , and Bernd Meier-Mader , who form the leadership team of SAP’s MEE digital supply chain (DSC) partner ecosystem. Their joint task is to connect DSC partners and SAP’s organisation and to accompany partners through the process of successfully setting up and delivering supply chain implementation projects to customers. At the same time, they help to generate growth, increase revenue, and boost competitive advantage.
“We are each based in different market units, and together we are responsible for a strong DSC partner ecosystem in Middle and Eastern Europe, which consists of 26 countries,” says Anna, leading the conversation as they set out how they go about achieving their mutual aims.
Building bridges starts with transparency, agree Bernd, Anna and Sasa, who strive to offer clarity and help businesses to benefit from SAP’s DSC partner ecosystem. They highlight practices that favour close, successful, and well-coordinated cooperation. Gaining SAP’s official DSC partner status is a seal of both approval and trust, and to achieve it a continuous flow of information is exchanged between parties.
“We can assist partners in gaining access to various funds that, for example, they can use for business development activities depending on their objectives,” says Bernd, highlighting just one of the many advantages of the partnership. The team points out that, in addition, SAP offers a range of business models through which DSC partners can sell SAP software solutions, maximising the benefits from a leading solution portfolio in a fast-growing market. Once approved as a partner, a business also has the option to use SAP as a sales channel for its own solutions.
“We motivate SAP’s DSC partners to break new ground,” says Sasa, citing the example of businesses being able to package their own intellectual property and services in combination with SAP solutions. “This offers a smart solution and allows us to combine the strength of partners and SAP, which in turn leads to the easier initiation of transformation projects for customers.”
By building up their own knowledge of both customers and partners, Sasa, Anna and Bernd help and enable new partners to demonstrate their organisations’ deep technical expertise. Sasa adds, “Imagine a circumstance where a customer wants to know what is needed to switch from an on-premise solution to the cloud. SAP partners also benefit from early knowledge-sharing, enabling development of new tools such as the recently launched SAP Quality Issue Resolution solution, which enables customers and suppliers to collaborate in a problem-solving process.”
New partners who join SAP’s partner programme gain access to a portfolio of industry-leading solutions that can boost business. “In addition to that, we provide access to SAP demo systems for partners,” says Sasa. The team’s objective is to pursue an efficient approach to partnerships, which enables continuous development of new customers and business. Typically, Anna, Bernd and Sasa plan go-to-market (GTM) activities that align with SAP’s partner network. This helps ensure that they have an in-depth understanding of how they can support each partner and increase the adoption of modern supply chain and manufacturing solutions. This year, the team has already kicked off GTM activities with a central theme of efficiency.
Sharing how they source information and define actions that drive efficient cooperation, Anna, Bernd and Sasa explain that they screen the partner project pipelines, DSC readiness, and utilisation. This could mean sharing recent organisational changes, updating information on strategy to keep partners aligned on key topics such as sustainability solutions, or highlighting how SAP Business Technology Platform can be used in supply chain.
Anna says the team and the partner keep track of the success of a project as it goes live to enable a smooth rollout. Maintaining dialogue between all parties helps ensure that customers are satisfied. Happy customers lead to more referrals by recommendation, which in turn lead to the implementation of similar projects for other customers. Collaboration also opens opportunities to sell new licences, and as demand increases, raises revenue for both SAP and the partner.
Another objective is to motivate partners to develop and deliver solutions that are not already available in SAP’s standard portfolio and the SAP Store online marketplace. In turn, this allows more customers to benefit from partners’ innovation. As support, Sasa, Anna and Bernd stay aware of market demand. This allows the team to suggest training for existing partners, enabling them to satisfy any specific customer interest, requirement, or request. Take the area of sustainability, which is increasingly important to customers, as an example. The trio can also demonstrate how partners can leverage The Factory for customer engagements.
“The annual GTM conversations are crucial and help us to understand the partner perspective. In our experience, we find that the greatest success occurs when both the alignment is good and we have facilitated the incorporation of our partners’ knowledge into SAP’s organisation and portfolio,” says Sasa.
What then, is the most important strategic direction that Sasa, Anna, and Bernd will be sharing with the partner network in 2023?
“We are asking partners to support customers’ big digital transformation projects focusing on the RISE with SAP solution and consider supply chain-related, and manufacturing-related improvements because these projects are of high interest,” Sasa says.
RISE and Supply Chain Solutions allow customers to improve efficiencies, fund innovation, and transform their mission-critical systems while minimising business risk. The solution can be combined flexibly from:
Big transformations in particular provide a good opportunity to form the foundations for future capabilities and supply chain competitiveness. Such foundations have an impact on the future readiness and success of a company, according to Sasa, Anna and Bernd.
“We rely on partners to use their industry expertise and objective viewpoint to showcase the power of new cloud solutions to customers and help convert them from an on- premise-based architecture,” Sasa explains. “We want partners to help customers with their precious product and industry know-how. They can run innovative and customer-valued sales cycles and successful project delivery approaches that will allow a simultaneous boost to indirect sales revenue growth rates while identifying further relevant cloud solutions. In addition, we want partners to actively contribute to meet customer requirements more easily and quickly through the positioning of ‘ready-to-use’ solutions from SAP Store.”
The trio agrees that the powerful circle of customer, partners and SAP’s reputation and knowledge will be crucial for continued success.
“This is particularly true during the current phase, where we have to restore supply- and-delivery capabilities and competitiveness under new and more difficult conditions,” Sasa says.
As a team, Anna, Bernd and Sasa are highly motivated to turbocharge SAP’s success with the help of a great partner network that still has so much potential to fulfil. There are lots of new topics and innovations that SAP’s partners can offer to their installed base and to new customers.
“DSC is a very consultation-intensive business, so we will continue to onboard knowledgeable partners in our ecosystem,” says Sasa. “We have a new competency framework in the SAP PartnerEdge? program that gives good guidance to develop partners’ own capabilities, raise market visibility, and make it easier for customers to recognise – and trust – partners’ proficiency in any given area.”
The team shares the conviction that SAP will become an even more partner-led company in 2023. As Sasa summarises, “It is a pleasure to watch as collaborations lead to a win-win-win strategy, where partners, customers and SAP gain not only a share of the expertise, but also the successes.”
SAP executives would like to express gratitude to all the partners who have joined us to contribute to this issue: All for One | SAP Consulting & Services , 源讯 , 毕博 , Camelot ITLab - A part of the Camelot Management Consultants brand , CENIT , concircle , CONSILIO GmbH , LeverX , NTT DATA Business Solutions , prismat GmbH and TeamViewer .
For further information on SAP’s offerings, visit www.sap.com
This article was originally published in the?February 2023 ?issue of?Digital Innovation , Europe’s go-to digital technology magazine.
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